* Rises 2 pct to one-week high, biggest gain in 3 weeks
* Volume high as investors roll positions forward
* Option's implied volatility at one-month low
* Gold-S&P positive correlation tightest in 6 months
* Coming up: U.S. November consumer confidence Tuesday
By Frank Tang and Harpreet Bhal
NEW YORK/LONDON, Nov 28 Gold rose around 2
percent on Monday to above $1,700 an ounce, its biggest one-day
gain in three weeks, swept higher by hopes that new proposals
may emerge out of Europe to tackle the region's debt crisis.
The metal rose in tandem with equities after Germany and
France stepped up a drive for coercive powers to reject euro
zone members' budgets that breach EU rules, easing mounting
European sovereign debt fears.
Bullion, which has swung between gains and losses in the
past seven straight sessions, surged as Wall Street,
commodities and crude oil broadly rose and the dollar fell on
resurgent investor appetite.
Some analysts said that gold -- a traditional safe haven
that has recently tracked riskier assets -- is still vulnerable
to future sell-offs unless it can recoup its safe-haven appeal
amid economic uncertainty. A poor technical outlook could also
limit bullion's gains.
"The rally in gold today to a great extent has been short
covering. We have a process in Europe that is not going to be
over any time soon," said Axel Merk, portfolio manager of Merk
Funds with $800 million assets under management.
"I do think that gold will resume its position as an
inflation hedge and hedge against the various uncertainties in
the world," he said.
Spot gold rose 1.8 percent to $1,709.44 an ounce by
3:39 p.m. EST (2039 GMT).
U.S. December gold futures settled up $25.10 at
$1,710.80 an ounce.
Volume was about 80 percent above its 30-day average,
preliminary Reuters data showed, boosted by contract rollover
ahead of December's first-notice day on Wednesday.
Trading volume often rises as futures investors roll their
positions forward ahead of first-notice day. This is because
the closing out of the December contract and the initiation of
the new benchmark February is showing up as two lots traded on
The 25-day implied volatility in gold options, a gauge of
bullion market risk, has fallen to its lowest in around a
month, indicating some investors are expecting steadier,
rangebound trade in underlying gold futures, traders said.
Spot silver tracked gold to rise 3.3 percent to
$32.04 an ounce.
Earlier in the session, gold touched a one-week high at
$1,719.89 an ounce, near its 100-day moving average -- a key
technical support it breached early last week.
"Right now caution is paramount as gold appears to be
consolidating its recent move between support at its 200 DMA
and resistance" at its three-month downward trend-line near
$1,750 an ounce, said Adam Sarhan, CEO of Sarhan Capital.
Sarhan said the fact that gold does not rally in response
to uncertainty in Europe suggests either the bears are getting
stronger, or very high correlation between gold and other risk
The positive link between gold and equities rose to its
tightest in six months on Monday. The 25-day correlation-log
between gold and the S&P 500 was above 0.5, highest since late
May.Among platinum group metals, platinum rose 0.8
percent to $1,536.99 an ounce, while palladium rose 2
percent to $573.75 an ounce.
3:39 PM EST LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1710.80 25.10 1.5 1684.00 1722.40 165,338
US Silver DEC 32.161 1.147 3.7 31.245 32.285 38,791
US Plat JAN 1539.50 6.40 0.4 1536.00 1567.50 4,789
US Pall DEC 578.35 8.25 1.4 565.60 595.00 3,670
Gold 1709.44 30.29 1.8 1681.20 1719.89
Silver 32.040 1.010 3.3 31.100 32.300
Platinum 1536.99 12.28 0.8 1540.25 1562.25
Palladium 573.75 11.50 2.0 567.50 593.22
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 307,394 171,038 189,638 27.9 -0.44
US Silver 70,936 57,434 78,957 49.09 3.96
US Platinum 5,052 6,323 7,530 31 -3.00
US Palladium 9,165 4,673 4,411